Design Group Regulatory News (IGR)

8th December 2010

International Greetings PLC ("the Company" or "the Group")

Interim Results

International Greetings PLC, one of the world's leading designers, innovators and manufacturers of gift wrap, crackers, cards, stationery and accessories, announces its Interim Results for the six months ended 30th September 2010 (2010 H1).

Financial highlights

·; Sales up 13% to £104.5m (2009 H1 restated: £92.8m)

·; Profit from continuing operations before tax up 110% to £2.1m (2009 H1 restated: £1.0m); no significant items in the period

·; Profit after tax is £1.9m (2009 H1 restated: £0.3m)

·; Operating profit was up 31% to £3.8m (2009 H1 restated: £2.9m)

·; Net debt at 30th September £86.4m (2009 H1: £101.2m), down 15%

- Increased from 31st March 2010 due to normal seasonal working capital requirements;

- Debt reduction programme remains on-track

Operational highlights

·; Increasing innovation and cross-selling throughout the Group businesses continues to deliver improved results

·; Licences continue to perform well

- Results benefitted from success of Toy Story 3 related product sales

·; Board confident in full year outlook

Paul Fineman, Chief Executive said:

"We are pleased that we have continued to deliver on our strategy and improve the profitability and cash generation of the Group. We have a strong platform in place and there remains considerable scope for our business to continue to benefit from knowledge-sharing, cross selling and deriving efficiencies across the Group.

"We expect conditions to remain challenging, but are pleased with our progress and excited about the growth opportunities across the international markets in which we operate."

Chief Executive's Review

Overview

We made good progress in the first half of this year, continuing to deliver on our strategy and achieving results in line with management's expectations. We are pleased with the way the Group businesses are working together to improve efficiencies and innovate new products and processes.

We are progressively reducing our debt and improving the Group's ability to generate cash. We continue to drive cross-selling opportunities across our businesses and we are particularly pleased with the sales growth of our everyday greeting card products.

The Board remains confident that, despite market conditions remaining challenging, the Group is well positioned for future growth and will continue to improve shareholder value.

Financial Review

Revenue from continuing operations for the period was £104.5m (2009 H1 restated: £92.8m). On a constant exchange basis, like-for-like turnover for the period increased by 6%. This was driven by growth mainly in UK and Australia.

Gross profit margin at 18.3% (2009 H1 restated: 18.2%) reflects improved margin performance in UK and USA, with price pressure in mainland Europe and slightly reduced margin in Australia. It also reflects our continued success to sell older stock and combat global significant inflationary pressures from raw materials, sea freight, and in the Far East, from significant inflation in labour costs and the strengthening Chinese currency.

Whilst underlying overheads were down 3% on a like for like basis, the full year inclusion of the Group's Australian business, Artwrap PTY, in this period means that, in total, operational overheads increased by 7% to £15.9m (2009 H1 restated: 14.8m).

Operating profit was up 31% to £3.7m (2009 H1 restated: £2.9m).

Finance expenses in the period were £1.6m (2009 H1 restated: £1.8m) reflecting the overall debt reduction throughout the period, which mitigated the increased bank charges.

Profit before tax was up 110% to £2.1m (2009 H1 restated: £1.0m).

There were no significant items during the period (2009: H1 nil).

The effective tax rate was 6% (2009 H1 restated: 54%). This reflects a tax repayment in the USA pursuant to changes in the tax regulation to allow loss carry back for 3 years, combined with a continuing recognition of losses that had not previously been reflected on the balance sheet as an asset. There are still £7.7m of tax losses not recognised as an asset in the UK and USA.

Basic earnings per share for the period were 3p (2009 H1 restated: 0.0p).

Net debt at 30th September 2010 was down 15% to £86.4m (2009 H1: £101.2m). The usual seasonal working capital increase was as expected. Debt reduction remains a key focus and our programme for this is on-track.

The Group's banks remain supportive, and further details of the Group's banking facility are included in note 1 of the Interim Financial Statements.

Debtors and receivables at £67.5m are up 14% from £59.5m at 2009 H1, and 12% on like for like exchange rates. This reflects the market trend for later delivery of goods committed for the Christmas season.

Whilst stock levels are down by 4% from £66.0m to £63.5m, it is anticipated that by the year end the stock reduction will be significantly greater.

Capital expenditure in the six months was £1.4m (2009 H1: £0.7m). The Group's final commitment to deferred consideration for previous acquisitions was settled in the period, by the issuance of 1.5m shares.

Cash used by operations was £35.7m (2009 H1: £28.6m) reflects the seasonality of the business, as 58% of the sales in the six month period occurred in the last two months.

As announced in the Annual Report and Accounts, in July 2010 the Board took the difficult decision to close the Eickpack business. Eickpack made losses each year since its acquisition in January 2007. The results of Eickpack are now shown as a discontinued business, and the comparatives have been restated accordingly. The results of Eickpack are shown in the Notes to the Interim Statement.

The Board will not be declaring an interim dividend (2009 H1: nil).

Operational Review

Sales in the first half year have grown in line with market expectations whilst we continue to deliver on our strategy of focusing our key efforts on debt reduction, cash generation, product innovation and increasing profitability.

We have increasingly developed a cohesive and collaborative approach across all Group businesses enabling us competitively to provide our customers with high standards of products and services.

The UK saw an 8% increase in sales, caused by increased Christmas cracker sales and the commencement of contracts for the supply of Everyday greeting cards with two of the UK's leading multiple grocery chains.

Whilst US revenues were 6% down on prior year, mainly resulting from later scheduling of Christmas orders, margins were up by 4% due to the focus on more profitable sales.

Mainland Europe saw sales increasing by 8% including a strong performance in Eastern Europe, but margins were impacted through product mix sold during the period.

Artwrap continues to perform strongly, with like-for-like sales up by 21%. A 3 year contract for Everyday greeting cards has been won with a major retailer, and the business continues to innovate with online ordering for bespoke products.

Our portfolio of licences continues to provide considerable commercial appeal and as anticipated Toy Story 3 licensed products proved to be extremely successful with sales of over £2m during the period.

Current trading/outlook

Since the period end, trading has continued in line with our expectations. The Christmas period remains an important time of year for the Group and we have continued to focus on delivering high standards of goods and services to our customers.

We expect conditions to remain challenging but are pleased with our progress and excited about the growth opportunities across the international markets in which we operate.

Paul Fineman

Chief Executive

International Greetings PLC

Interim Report 2010

Consolidated Income Statement

For the six months ended 30 September 2010

International Greetings PLC

Interim Report 2010

Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2010

International Greetings PLC

Interim Report 2010

Consolidated Statement of Changes in Equity

International Greetings PLC

Interim Report 2010

Consolidated Balance Sheet

as at 30 September 2010

International Greetings PLC

Interim Report 2010

Consolidated Cash Flow Statement

For the six months ended 30 September 2010

International Greetings PLC

Interim Report 2010

Notes to the interim report

1 Accounting policies

Basis of preparation

The financial information contained in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006 and is unaudited.

The Group interim report has been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The financial information for the year ended 31 March 2010 is extracted from the statutory accounts of the Group for that financial year and does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) of the Companies Act 2006.

Restatement

The comparatives balances as at 30 September 2009 have been restated due to a prior year adjustment relating to 2007 as described in the Report and Accounts for the year ended March 31, 2010. The effect of the restatement is to increase current liabilities by £718,000, deferred tax assets by £183,000, and reduce translation reserves by £65,000, and retained earnings by £470,000.

Bank loans and borrowings in the prior period have been restated to separate the Asset Backed Loan that had previously been included as an element of the overdraft.

Discontinued operation

The comparatives for the 6 months to 30 September 2009 and year to 31 March 10 have been restated to remove the results of a business that was discontinued in July 10. See Note 3 for further details.

Going concern basis

The Financial Statements have been prepared on the going concern basis, not withstanding the net current liabilities of £7.3 million (2009 H1:£10.7 million).

The Directors believe this to be appropriate because as in previous years, the Group relies primarily on a short term facility for its working capital needs without prejudice to the on demand nature of the facility, and assuming the business performs in line with expectations, that sufficient of the current facility will be renewed on 30 June 2011.

The borrowing requirement of the Group increases steadily over the period from July 2010 and peaks in September and October 2010, due to the seasonality of the business, as the sales of wrap and crackers are mainly for the Christmas market, before then reducing.

As with any company placing reliance on external entities for financial support, the Directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of this interim report, they have no reason to believe it will not do so.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing this interim report.

The interim report does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 March 2010.

Significant accounting policies

The accounting policies adopted in the preparation of the interim report are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 March 2010, except for the adoption of new Standards and Interpretations as of 1 April 2010, noted below:

IFRS 3 Business Combination (revised January 2008)

The revised Standard requires acquisition-related costs to be expensed and not included in the purchase price and contingent consideration to be recognised at fair value on the acquisition date (with subsequent changes recognised in the income statement and not as a change to goodwill). The Standard also changes the treatment of non-controlling interests (formally minority interests) with an option to recognise these at full fair value as at the acquisition date and a requirement for previously held non-controlling interests to be fair valued as at the date control is obtained, with gains and losses recognised in the income statement. The adoption of this amendment did not have any impact on the financial position or performance of the Group.

IAS 27 Consolidated and Separate Financial Statement (revised January 2008)

The revised Standard no longer restricts the allocation to non-controlling interest of losses incurred by a subsidiary to the amount of the minority equity investment in the subsidiary. Any future partial disposal of equity interest in a subsidiary that does not result in a loss of control will be accounted for as an equity transaction and will have no impact on goodwill, nor will it give rise to any gain or loss. Where there is loss of control of a subsidiary, any retained interest will have to be remeasured to fair value, which will impact the gain or loss recognised on disposal. The adoption of this amendment did not have any impact on the financial position or performance of the Group.

2. Segmental information

Segmental information is presented in respect of the Group's geographical segments which are the primary basis of segmental reporting.

Geographical analysis

The results below are allocated based on the region in which the businesses are located; this reflects the Group's management and internal reporting structure. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Intra-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

2 Segmental informationcontinued